Transcripts For CNBC Street Signs 20240712

Nasdaq leading gains but european equities hold near the flat line and oil outperforms. Shares of altice soar after news of the buy out of the giant and delist the shares. Rio tinto ceo resigns after destruction of two aboriginal sites and unrest at the miners fallout. Welcome to street signs. Happy friday lets take a look at european markets and how we are trading we have a little mixed picture now. The dax down 0. 2 . The cac around flat line, the ftse mib down. Yesterday, we saw european markets retreat. We did miss that big drop off in the u. S. Session that took place after european markets closed. A little momentum coming off the lower wall street session yesterday. Lets look at the sector weve got Household Goods up. 7 health care, real estate tell come and food and bef a bit of a defensive tilt. In contrast, oil and gas down 1 the worst performing part of the market 5 , insurance, industrials sterling has come under pressure as stalling negotiations erodes trust out of europe and london speaking to berlin, the german and french finance ministers gave their takes on the talks. What he already agreed to treaties have to be obeyed this is with anyone else my view is that you have to do it up to the last moment but you have to be very clear. They want to make one point really clear they do want to do anything that will jep ardize the single european market. For us is one of the key achievement. We will never exit any kind of decision that might weaken or jeopardize the market. Joining me now, the former secretary for exiting the European Union thank you for being with us. What do you think of this move to pass this market bill coming as a bit of a shock to everybody at this stage. We havent got long to get a trade deal sorted out this is really sorted out over the next four or five weeks this does not engender trust is with the way the government has done it, this is a concern or another attempt in my view to put more pressure on the eu. We dont know where the government will go with this where things unfold over the next couple of days. Going to their stance and in terms of the domestic situation in the uk. There are still hurdles coming through before becoming law. What are the chances it actually succeeds in its current form, it is very low lining up to condemn this meeting in a leader of the conservative party there are rumblings on the back benches in the house of commons. The passage of this bill will be really tough and on an accelerated time the main purpose is about the internal market within great britain. It is bitterly opposed by the developments of scotland and wales. While the Uk Parliament can overrule, this is not conducive to the uk itself as the government is running around 55 . So this is another challenge to the integrity of the United Kingdom. We are living in extraordinary times in the uk. Being very vocal and described the bill on the powers at bell fast and cardiff how do you think Boris Johnson is planning to navigate this situation or challenge when it comes to unity in the United Kingdom and the way they look at this bill . There has been a big change and the approach they are taking is more assertive. Rather than seeking to work with the governments in scotland or wales, the aggressive position for what that delivered and imposing the view on how the settlements would cooperate. We have collections coming up in scotland next year in wales. It was a critical time for the opinion of independence in scotland and wales increasing month on month trying with that approach generating a lot of interest the key thing is what people in wales think. I am far persuaded Boris Johnson is not popular north of the Scottish Border we are looking at this ultimatum theyve given to the uk where you have three weeks to drop this legislation or theyll look at ways to retaliate. They havent stopped the trade negotiations or talks around the future trade relationship. What is your interpretation of their strategy here . That is quite interesting on one move of this, this is a popular move on the part of the government which is designed to come out of the room in the government talking domestic audience that was another lot that walked out. Theyve seen that coming a mile off. They want to be portrayed as the adults in the room with a very heavy heart, they will stick with it lets not forget it is still possible well get this deal sorted out this isnt a huge amount remaining in the differences between the two sides. It will choir reaching down very, very deep to find the remaining good will to get a deal sorted out. A deal recognizes that for both sides, it has to be emphasized that a trade deal has to be in the best interest of both sides no deal is not a good place to be it is good to look at that no deal stands on the sides saying there are still significant differences in areas of the interest for the eu how do you reconcile with what he says . It is the quantity i was referring to, so there are two big remaining issues hes quite right, there has been very Little Movement thats fisheries and in this access to quote. People would argue no deal would be very damaging and everybody expects there would be a solution there the really tough one is the state aid issue. We dont want any constraints other than wto to subsidize in the uk if you want access to our market thats possible giving our business an unfair advantage now is a really tough one. Hes been right and there have been very Little Movements on that it seems to me other things could fall into place really quickly. This is a tough question. Do you think that the uk really means it when it says it would accept no deal and would agree to trading under the wto rules it depends who you talk to. They do generally believe that i dont know if any of us know where the Prime Minister is at let me give you perspective on that in a nodeal context, there will be a new trade border with the eu with all the consequences that brings. In a no deal world, we have tariffs, which will really hit automotives in the uk. It will make it very much more difficult to sort out an orderly position in that time of the year, making disruption more likely and almost impossible to get all the other deals sorted out to get data add kwasy. I come back to the point about the deal in the United Kingdom no deal would be gris to the party. We go to the critical elections next year. Of course the uk will survive no deal nobody is denying that the question is what is the Collateral Damage. That would be in my view, very, very large indeed. When we think about Collateral Damage and what message this would send to the rest of the world when we see the uk continue down this path breaking International Law with this in their approach to issues with china or russia when they dont like the conduct theyll see what kind of message does that send it sends a poor message and rightly so it has been founded on respect with collaboration in order to ensure the trade environment and so on. To the uk to be saying we are going to reinterpret one of the more important agreements we have done is quite shocking. You can see the reaction and what nancy pelosi has said in the u. S. And what it would be in terms of the u. S. Deal when it looks like the uk is rolled back this is very, very serious territory. Others take pause and think of what they are doing. Thank you for speaking to us. The uk economy has grown for a third month in a row pointing to signs of a recovery. 6. 6 through july. Through the conditions with gdp 7. 7 lower than a year ago how to pay back 750 billion euros. Well hear more from the berlin meeting. Thats after the bakre welcome back to street signs. Eu finance ministers are meeting of how to talk borrowings. Weighing using new tax revenue including the digital tax. There are shots of this meeting getting under way now. Lets get out to sylvia for more what can you tell us what youve heard so far from some of the key ministers . First, this is a new formal meeting. That is important. That tells us they are not going to announce any measures or proposals today but that they are having important discussions. The first is on the state of the eurozone economy we heard from the ecb revising the 2020 gdp forecast after recognizing the economy has performed slightly better than what it had in june. Slightly contrasting from 8. 7 to 8 in 2020 nonetheless, there are still a lot of uncertainties of how the economy will perform in the coming months. On the condition of the economic affairs. Recovery is on the way but we still have the level of uncertainty on the speed the mission for the euro group and ministers is very clear. We have confidence and strengthen growth then the next important discussion ministers will have today is that in the afternoon about what they call on resources and how they can find ways to pay for the 750 billion euros starting in 2021 thats where the talk of digital taxation comes in. Some believe they should have their own euwide digital tax. Some think they should process the agreement at the level we heard from the french mns minister, supporter of the euwide digital tax saying if there is no agreement by the end of 2020, then they should make a proposal at the start of 2021. Lets take a look at well. The only winners of the economic crisis are the digital giants i think this is a new reason to accelerate the work we are doing within the oacd to have a fair digital taxation and the minimum tax from the Corporate Tax we should have by the beginning of next year, 2021, the Digital Solution ive been discussioning my point with many of my partners with the oacd fairs it is up to the European Countries to take the lead and adopt in the first trimester of 2021, the fair and digital taxation in the meantime, the executive ward of the ecb has begun this morning we heard when they arrived today that netherlands is nominating Frank Elderson to replace eves who ends his mandate in september. There could be more candidates and theyll have to choose who for themselves that will be another process for us to monitor in the coming months thank you for your reporting. Lets bring in professor clemens to weigh in on what well see in the coming days. One of the big topics is going to be using euowned resources to pay back debt in your view, how much political will is there to do things like levee fresh digital, Corporate Taxes to repay this debt in the future i think there is a political will to do something about raising money to service the debt of the new eu fund but im not sure if it will be the digital tax in the end it will probably raise not more than 5 billion in the year. If you hold the risks associated with the move. The main risk is the trade war with the u. S this will primarily fall on the u. S. Digital companies and the government has already said they will not let the europeans tax their debt the idea that this will raise a lot of money is an illusion and many have understood that. Apart from that, this is being discussed at the oacd level. Theyll gain some taxing rights and lose some. They will not be additional revenue available for changing the rules for taxing companies at the oacd level. So this is a popular idea but not going to work in practice. Interesting you say this would come to terms relative to the retaliation. Then youve got the french finance minister coming out strongly saying if we cant agree on the oacd tax, we should have a solution by q 1 next year it feels as though hes not backing down how do you reconcile that . We have to understand traditionally finance ministers and heads of government are speaking to the domestic public. It sounds great to make these strong statements but im sure bruno is very much aware of the risks. The u. S. Has already announced Digital Measures and this is a dead end lets switch gears, one other topic is Banking Union we know this has been an important topic for the minister im curious if you think the covid19 crisis has changed the calculus when it comes to the Banking Union. Madam lagarde saying part of her wish is to see process on the Banking Union. I do think this is an important area what the covid crisis does is increase the uncertainty about the state of the banking system. Especially in the countrys most with the deposit insurance, this is more difficult. Southern european banks. Italian banks, Spanish Banks may not be solid these concerns are now stronger. It will probably be more difficult to make progress with the Banking Union which is a pity because the Banking Union is needed. We shouldnt be limited. That is a difficult subject and it would be important to make recovery the importance would be a big obstacle we look to the future many believe the reduction of globalization. Looking at the german policies where many are reliable. How do you see this shaking out . What would this mean for the German Economy there is a danger that this would reduce globalization and there are forces saying we should produce more at home it would be a lot of damage not just to the economy, the German Economy as a whole the risks should mean more diversification, not importing goods from one country but having many suppliers in the end that requires more globalization so we reacted by more skepticism and still i hope that countries will refrain from doing this there is a clear danger here and it would be completely wrong economically asking you about the german car industry elon musk was recently in berlin visiting volkswagen. We know hes made a big deposit for the giga factory there as the german carmakers get up to speed and start releasing their electric vehicles. What is your take of how the german carmakers will fair in the electric car world there is a lot of work and research being done by german carmakers. There are a lot of models coming out there is some that say the german carmakers are getting this change from the dominating technology to the new technology is something where the big German Companies do seem to be having a hard time they have understood and they need this change and have a lot of come tense in manufacturing so the hope is that they will do it for me, the big issue is even if bmw and daimler do it, does that mean the jobs in germany will be represerved. That is the main risk. They are good at working metal and coumbustion. Will those be made in china, thats where im skeptical a good point. Thank you for joining us coming up, rio tinto ceo gives into pressure and resigns over destruction of aboriginal sites. Well have the lesafr e eak. T teth what if you could have the perspective to see more . At morgan stanley, a global collective of thought leaders offers investors a broader view. We see companies protecting the bottom line by putting people first. We see a bright future, still hungry for the ingenuity of those ready for the next challenge. Today, we are translating decades of experience into strategies for the road ahead. We are morgan stanley. Welcome back to street signs. These are your headlines europes finance minister criticizes brexit talks after giving an ultimative forthwith drawl agreement. It is clear Everyone Needs to stick to what he agreed to treaties need to be obeyed u. S. Futures bounce. Equities hold near the flat line as oil underperforms shares of altice soar after news of a buy out. Rio tinto ceo steps down amid outrage of the destruction of two aboriginal sites following investor unrest of the miners handling. Lets check on european markets. Yesterday, the main benchmark dropped about 0. 6 we did close up shop before that was more substantially lower the dax trading 0. 51 lower and holding flat around the zero mark and the ftse mib under performing the uk market outperforming this morning about 20 basis points. 4 x markets and yesterday was a big day for the euro we saw significant depreciation. We had comments suggesting that they are not targeting the Exchange Rate and monitoring developments that they wont be pushing back against the strength this morning, we have the euro trading higher up 0. 3 we did briefly touch the 119 mark yesterday but have since paired back gains. Sterling up and hovering around the 1. 28 mark. Brexit negotiations come back to the front line u. S. Futures. Lets look at the final day of trade this week. The s p, the dow and nasdaq all looking to open higher the dow looking to bounce about 180 points if these levels hold. Yesterday, they underperformed dropping by about 2 in europe, altice shares have shot up after announcing that the Company Founder will buy out the remaining shares this deal to be completed by the end of 2021 when he plans to delist altice. Bayer with a threeyear contract extension seen as a move of confidence after securing an 11 billion euro settlement in the lawsuits earlier this year. Keeping bayer at the helm. Shares are up more than 2 as well as two other executives have announced this he will step down over criticism of the destruction of aboriginal sites. Well file this report from sydney the australian industry after the cave blast back in may he wont be alone. Chief executive also stepping down with immediate affect plus the head also stepping down but will remain with the company until december he will stay until march 31st until a suitable replacement can be found the company is undergoing a full search for candidates to take over they work to rebuild the relationship with the indiginous owners of the area issuing a statement saying what happened there was wrong and we have determined to ensure the destruction of such a site never occurs again at rio tinto. It will put a lot of the miners on notice. Bhp just is nounsannounced theye up a council and with a resolution over the own development and 60,000 year old cave site that is potentially at risk a number of names have been floated for executives like the likes of several but all eyes will be on the path forward for the miner especially when it does come to the issues being raised there is an ongoing government inquiry to the blast that is still in effect and some have been calling on further border renewal and scrutinizing of the company because 75 of its earnings arrive from that region reporting for cnbc back to you guys ecb president Christine Lagarde said the central bank is monitoring the euro as ecb extended asset purchases until june next year keeping policy rates unchanged in september and held rates steady at 0. 5 and lagarde highlighted how the stronger euro could impact inflation targets. We do not target but we monitor. We monitor carefully the appreciation of our currency has an impact on our inflation as i said, it is not a policy target for us. Im not going to comment on the level of our currency but it is clear that external value of our euro is an important determination of our area. Well continue to monitor the development and be attentive to them ecb Board Members are speaking out following the meeting. The euro appreciation will dampen the inflation outlook while he says the Exchange Rate will be monitored going forward. Forwarder fed chair has sited the inflation for his biggest concerns of the economy. The man that coined the phrase irrational ex ub rans has down played the outlook basically the results are a huge increase in entitlements that are crowding out private investment and productivity growth my major concern is inflation. It hasnt emerged in any significant way yet. Thats the area where i think our problems lie on the data front, u. S. Weekly jobless claims came in at 884,000, worse than expected sitting above 13. 3 million meanwhile, claims under the unemployment assistance concerns the senate has failed to pass the new stimulus package after not winning any votes from across the siel. The bill would have included a trimmed down extension of unemployment assistance and new Small Business loen loans leaving out some major social assistance measures. We have this report. Well bring you kaylas report later let me bring you to another story. U. S. President donald trump and joe biden will pause their campaigns to remember the 9 11 terrorist attacks. Well go now to washington, d. C. Reporter good morning, yes this is the 19th anniversary of 9 11 this will be a rare moment President Trump and joe biden will be in the same location theyll go to pennsylvania today where flight 93 crashed in a field after the passengers fought back. They will go there separate times. The president going there this afternoon and biden said to spend his morning in new york at the memorial this commemoration will look different. There will not be the typical crowds over concerns of coronavirus and it is coming at this next moment of National Crisis the corona crisis is threatening some of the bipartisanship we saw. President trump spoke out on the attack against joe biden and he was defending himself against the explosive revelations that came out this week in Bob Woodwards new book where the president talked in taped interviews how he knew how dangerous the cirrus was in early february and later in march saying he intentionally played down the threat because he did not want to cause a panic. The biden harris ticket has been ceasing on those comments and speaking out accusing the president of failing to act on information he had early on about how dangerous the coronavirus was. They say that put more american lives at risk. President trump insisting even though he was speaking in a way that tried to maintain calm. He said he was acting swiftly, shutting down travel to china in order to contain the Coronavirus Spread back to you. Thank you for bringing us that story microsoft believes russian statebacked hackers have targeted an Advisory Firm working for the Biden Campaign microsoft has identified the Hacking Group called fancy bear. The group that claimed to hack Hillary Clintons email in the 2016 election. Well have much more from dylan jones interview after the break. Welcome back lets get a check on wall street weve got red across the board the nasdaq and tech index again underperforming. It was a volatile day yesterday swinging between gains and losses after european markets closed we took a turn for the worse. The nasdaq down about 2 a couple of negative headlines weighing on sentiment. That slimmed down stimulus bill wasnt a huge surprise but certainly didnt help at all microsoft announcing they detected new Cyber Attacks targeting the u. S. Elections we have u. S. Jobless claims come through. Slightly higher than expecting the number 884,000 versus 850,000 expected it has been a tough week for the u. S. Markets the nasdaq 3. 5 today on pace for the worst Weekly Performance since march. Down 2. 6 on the week. The dow down about 2. 1 . Interesting to square those losses coming into the session, coming in 1. 5 . Europe strongly outperforming the u. S. And one of the Big Questions we are facing is this the beginning of a rotation out of tech stocks leading the rally. That seems to be a little bit of what we are expecting this week. Will this trend continue is one of the questions we are all asking one big story i want to highlight. Citigroup has named jane fraser as next executive. The britishborn head of Consumer Banking becomes the first woman to lead a major wall street bank. Peloton shares jumped as sales jumped 172 . The fitness maker said it benefitted from Product Sales after pandemicled lockdowns after increase in demand the amazing report, the average number of rides from users 25 times per month. The huge usage of those bikes. Oracle shares rose after the u. S. Software giant beat profit among working in the Cloud Services the first fiscal quarter of 2021 rose 5 and revenue edged up to 9. 4 billion. President trump will not extend the deadline for tiktok to find new owners for u. S. Operations next week or face being banned chinese parent bytedance has been looking for a buyer bidders include a joint offer from microsoft and walmart and oracle tiktok has sued the government saying the order is, quote, heavily politicized. Lvmh says it will counter sue tiffany after the troubled buy out falls apart. Yesterday following the lvmh announcement it is backing away from the 16. 2 billion take over the nation industry contributed millions last year from the mens wear council dylan jones. Im excited to hear this conversation what can you tell us dial an jones is thinking about the future of the fashion industry it is great to virtually see you. I hope you are doing well. I caught up with dylan jones hes been editor and chief of british gq for over 20 years now. Hes one of the lead figures in fashion. We talked about print, publishing, media and fashion. As you said, fashion industry contributed to over 35 billion pounds in the gdp last year. Of course due to coronavirus, they are facing huge challenges. This is what he had to say yes, there will be casualties in media, retail, in luxury. It will be ever where. The weird thing is that the fashion industry is meant to be up to date, continually changing, responsive to changes but actually there is large parts of the luxury goods industry which is very Old Fashioned, this pandemic and this lockdown and change in behavioral patterns has already changed the way these companie worked a lot of these didnt have transactional websites and had huge dependence on bricks and mortgage per but that will change this has been going on for years. The problems with super markets, department stores, shopping centers. This conversation has gone on for a long time and will accelerate those conversations as you can hear, what hes saying, the pandemic is forcing a lot of the brands to rethink their strategy he said it is long overdue because a lot of the bricks and mortar that they rely on is actually quite Old Fashioned the digital platform is key for them right now one of the other big topics right now is sustainability and consumers looking more toward longer looking fashion did dylan jones have anything to say about this he did. He said it is really key he said that consumers, especially the young consumers will not actually go and buy the products unless theyve be ethically produced so sustainability is a huge topic. A lot of the big brands are looking at ways forward to produce what they call fast fashion but in annage call and sustainable way. He talks a lot about that. He said it is key. He said his own daughters who are about 20, 21 refuse to buy from brands that have not v had ethically or sustained production it feels like we are moving in that direction. Thank you for the discussion today. Great to see you can you see more in a new episode of cnbc conversation saturday at 19 30 cet. Lets take a look at u. S. Futures and how we are posed to open on the final session of the week the nasdaq set for about 160point bounce back today. The dow jones looking at about 150point bounce back, the s p looking at a stronger opening. Yesterday, another volatile day for u. S. Markets we started around the flat line but then selling off steeply into the afternoon session yesterday. Coming up today, u. S. Investors will be watching the u. S. Cpi reading for august the big question, will this tech se selloff continue hope you have a wonderful weekend. Im Julianna Tatelbaum Worldwide Exchange is coming your way next. The big events are back. Xfinity is your home for the return of live sports. This 5 00 on cnbc. Will stocks finish on the high note and President Trump giving tiktoks Parent Company no wiggle room with the deadline days to go get back to the office, Jp Morgan Chase telling top managers time to wrap up working from home. Kansas city chiefs picking up right where it lef